I am a mortgage broker - if I am asked the first answer is pay off your mortgage.
I am a mortgage broker – if I am asked the first answer is pay off your mortgage.
So you can sell them an equity release product in a few years time? 😉
In reality this is not really true. With ‘average’ luck you get less than 4% on sums of £5K+ invested.
I'm gettin 4.6% on my isa ( maxed out my allowance) 3.5% on a savings account. 4%ish on the premium bonds is not far off that with a chance of a big payout - and the bonds can be redeemed instantly
yes I am a financial ignoramaus. I was not really recommending a course of action - I was saying what I as a financial ignoramus had done in a similar situation to the OP 🙂
4%ish on the premium bonds is not far off that with a chance of a big payout
Trouble is the 4% average includes that big payout so it pushes the average up. Most people don't win the big prize so most people get a much lower annual return.
I like watching Meaningful Money on YouTube and James Shack, both have different styles but both seem pretty canny.
I have a general mistrust of FA's, no idea if this is justified.
We have just been through the same process as you. Inherited £175,000, we have paid of a BTL that was on a flexible tarrif and had reached 5.9%.
We have put aside £67,000 to pay off the other BTL as it comes due in October.
Put £20,000 in a cash ISA, £25,000 in my pension (will add a bit more once I get my books done) and the rest in the best interest accounts we can find with withdrawals a year.
At 52, our focus is trying to sort out my previous stupidity at not understanding how compound interest works and why I shouldn't have stopped paying into my pension years ago.
I also feel pretty strongly that we shouldn't worry too much about every single penny as that seems like a great way to make yourself unhappy.
Why oh why do schools teach us so many things that we will never use but don't teach us the things we will definitely need.
I grew up in a family with no spare money and plenty of credit card debt. My family didn't have any money to invest to pass on the knowledge.
Perhaps most importantly, we put £2880 into a SIPP for our 12 yr old and will endeavor to do this each year.
So you can sell them an equity release product in a few years time?
Equity Release gets a bad rep, but there's nothing wrong with it as a concept - you get to spend and enjoy some of the cash that's wrapped up in the value of the property you own.
I think most of your questions have been answered here, but if it was me, ( and not knowing the amount ) I'd be spreading it around. A bit in the pension, a bit off the mortgage , ISA's and and cash you can get hold of should you need it. I don't know if you have kids, but starting a pension now for them with say 10k in, would benefit them greatly in the future.
Update: we didn't see a financial advisor.
We did go through this - https://ukpersonal.finance/flowchart/ - and a couple of other useful links.
After topping up the emergency fund and ringfencing some coming expenses - the roof needs work, our '09 car may need replacing at some point - there really wasn't enough to bother a professional with. So we just split the remainder between pensions and mortgage.
Thanks for all the viewpoints! 🙂
That's a nice flowchart! I have seen something similar before, but that one seems more comprehensive
Used several IFAs over the years. Helpful.
Before engaging one figure out your financial goals. Any book on the subject will help if this is new to you (Alvin Hall’s for example). Or moneysavingexpert.
My thoughts always go to tax efficiency: how can I get most of the value. Once you’ve accounted for any unavoidable losses (inheritance tax?) that often means pension savings, but that’s fairly long term. Though if you are a pension ‘late starter’ you’ll get the advantage of compounding.
you could put the max amount away each year into an ISA – currently you can get about 5% (tax free).
ISAs may make sense. But the tax savings are limited and there are many constraints. Moneysavingexpert and IFA would help here.
I've used one, intermittently - actually, over the years, several.
Some so-so - and the ones through work were uniformly sharks.
One up here was so-so - they wanted me to transfer my pension over to them which I was not prepared to do.
As a couple, we have had a review - paid for (a decent amount of work went into it) - and some of that was pension related too. In the end we picked the bits we wanted, but ignored the actual "transfer" parts of their proposals.
The same one, for balance, advised my mum and was spot on - sure they got commission, but it was stuff I would;'t have worked out or organised.
